StuckInASaab
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Dow Jones Business News
New Pittsburgh Airline: Funding Through Pvt Placement
Tuesday October 14, 2:41 pm ET
By Elizabeth Souder, Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The former head of America West Holdings Corp. (NYSE:AWA - News) , Edward Beauvais, is starting a new low-cost airline out of Pittsburgh that's likely to give US Airways Group Inc. (NYSE:U - News) a run for its money.
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Beauvais said in an interview with Dow Jones Newswires Tuesday his new project, which he currently refers to as Project Roam for lack of a proper name, will begin service out of Pittsburgh in June.
"It's going to be a low-fare, low-cost airline," he said.
The airline will be modeled after Southwest Airlines Co. (NYSE:LUV - News) and JetBlue Airways Corp. (NasdaqNM:JBLU - News) , and will offer coast-to-coast flights. Initially, the airline will serve Boston, New York, Washington, Philadelphia, Chicago, and four other destinations out of its Pittsburgh hub.
At first, Beauvais will operate three new Boeing 737-700s. In time, he expects to add enough planes to service 39 destinations.
Beauvais said he is currently finishing a private placement to fund the airline. He said an initial public offering is "always feasible," but not in the works right now.
Beauvias said he expects the new airline to grow for the next 10 years, doubling in size each year for the first couple of years.
He said expects the growth to be much like that of his former airline, America West, in Phoenix.
Beauvais wouldn't give details of the funding for the airline, neither the amount needed nor the timing of the private placement.
Allegheny County Chief Executive Jim Roddey, who negotiated with the new airline on behalf of the Pittsburgh airport, said the placement will likely be to an investor with a track record of investing in airlines.
Project Roam may give industry giant US Air a run for its money. The network carrier operates a hub in Pittsburgh, but has been considering reducing service from hub status since the carrier emerged from Chapter 11 protection.
David Castelveter, spokesman for US Air, said the airline seeks $500 million in debt reduction, or it will have to de-hub Pittsburgh, which would result in a dramatic reduction in daily flights for the city. He said the addition of a new airline doesn't change the issue of debt reduction.
"We compete with low-cost carriers every day," he said. "There is plenty of room in Pittsburgh for competition."
Discount airlines may not be able to offer service to as many markets out of Pittsburgh as a network carrier, Roddey said. Currently, 100 destinations are served out of Pittsburgh. But Roddey said he thinks as many as 80 destinations could be served out of Pittsburgh, even if US Air cuts some service.
Roddey said the new airline is considering eventually establishing partnerships with an international air carrier and a regional carrier to extend the airline's reach. Project Roam, however, only plans to fly the standard 737, which is the right size for servicing large domestic markets.
Further, Roddey said he expects the addition of discount airlines to stimulate demand among people who currently don't fly very often, or who drive to Cleveland to get better fares.
"We are losing between 600,000 and 700,000 passengers a year from people who drive to Cleveland to fly on Southwest," he said.
Around 15 million people fly to Pittsburgh each year, with 65% of those passengers connecting to other destinations, Roddey said. Roddey said the new airline's business plan assumes that US Air will continue operations in Pittsburgh.
Roddey said he is in talks with other discount airlines as well, including Southwest Airlines, about opening service in Pittsburgh.
- By Elizabeth Souder, Dow Jones Newswires; 201-938-4148; [email protected]
Will U give up the territory?
New Pittsburgh Airline: Funding Through Pvt Placement
Tuesday October 14, 2:41 pm ET
By Elizabeth Souder, Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The former head of America West Holdings Corp. (NYSE:AWA - News) , Edward Beauvais, is starting a new low-cost airline out of Pittsburgh that's likely to give US Airways Group Inc. (NYSE:U - News) a run for its money.
ADVERTISEMENT
Beauvais said in an interview with Dow Jones Newswires Tuesday his new project, which he currently refers to as Project Roam for lack of a proper name, will begin service out of Pittsburgh in June.
"It's going to be a low-fare, low-cost airline," he said.
The airline will be modeled after Southwest Airlines Co. (NYSE:LUV - News) and JetBlue Airways Corp. (NasdaqNM:JBLU - News) , and will offer coast-to-coast flights. Initially, the airline will serve Boston, New York, Washington, Philadelphia, Chicago, and four other destinations out of its Pittsburgh hub.
At first, Beauvais will operate three new Boeing 737-700s. In time, he expects to add enough planes to service 39 destinations.
Beauvais said he is currently finishing a private placement to fund the airline. He said an initial public offering is "always feasible," but not in the works right now.
Beauvias said he expects the new airline to grow for the next 10 years, doubling in size each year for the first couple of years.
He said expects the growth to be much like that of his former airline, America West, in Phoenix.
Beauvais wouldn't give details of the funding for the airline, neither the amount needed nor the timing of the private placement.
Allegheny County Chief Executive Jim Roddey, who negotiated with the new airline on behalf of the Pittsburgh airport, said the placement will likely be to an investor with a track record of investing in airlines.
Project Roam may give industry giant US Air a run for its money. The network carrier operates a hub in Pittsburgh, but has been considering reducing service from hub status since the carrier emerged from Chapter 11 protection.
David Castelveter, spokesman for US Air, said the airline seeks $500 million in debt reduction, or it will have to de-hub Pittsburgh, which would result in a dramatic reduction in daily flights for the city. He said the addition of a new airline doesn't change the issue of debt reduction.
"We compete with low-cost carriers every day," he said. "There is plenty of room in Pittsburgh for competition."
Discount airlines may not be able to offer service to as many markets out of Pittsburgh as a network carrier, Roddey said. Currently, 100 destinations are served out of Pittsburgh. But Roddey said he thinks as many as 80 destinations could be served out of Pittsburgh, even if US Air cuts some service.
Roddey said the new airline is considering eventually establishing partnerships with an international air carrier and a regional carrier to extend the airline's reach. Project Roam, however, only plans to fly the standard 737, which is the right size for servicing large domestic markets.
Further, Roddey said he expects the addition of discount airlines to stimulate demand among people who currently don't fly very often, or who drive to Cleveland to get better fares.
"We are losing between 600,000 and 700,000 passengers a year from people who drive to Cleveland to fly on Southwest," he said.
Around 15 million people fly to Pittsburgh each year, with 65% of those passengers connecting to other destinations, Roddey said. Roddey said the new airline's business plan assumes that US Air will continue operations in Pittsburgh.
Roddey said he is in talks with other discount airlines as well, including Southwest Airlines, about opening service in Pittsburgh.
- By Elizabeth Souder, Dow Jones Newswires; 201-938-4148; [email protected]
Will U give up the territory?
